SECURITIES PLEDGE AGREEMENT
SECURITIES PLEDGE AGREEMENT (the "Agreement"), dated as of July 9, 1999,
made by and among MIDDLE AMERICAN TISSUE INC., a Delaware corporation having an
office at 000 Xxxxxxxxx Xxxx, Xxxxxxxxx, Xxx Xxxx 00000, as pledgor, assignor
and debtor (together with its successors, "Pledgor"), THE CHASE MANHATTAN BANK,
having an office at 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, in its
capacity as collateral agent, pledgee, assignee and secured party (in such
capacity and, together with its successors in such capacity, the "Collateral
Agent"), the WARRANT HOLDERS listed on the signature pages hereto (together with
their successors and assigns, the "Warrant Holders") and THE CHASE MANHATTAN
BANK, having an office at 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, as
trustee (in such capacity and, together with its successors in such capacity,
the "Trustee") with respect to the Notes (as hereinafter defined) issued
pursuant to the Indenture (as hereinafter defined).
RECITALS:
A. In connection with the execution and delivery of this Agreement, the
Trustee and Pledgor have entered into that certain indenture, dated as of July
9, 1999 (as amended, amended and restated, supplemented or otherwise modified
from time to time, the "Indenture"), pursuant to which Pledgor has issued its
15% senior secured discount notes due July 9, 2007 (the "Series A Notes").
B. It is contemplated that Pledgor may, after the date hereof, issue
exchange notes pursuant to the Indenture ("Series B Notes"; together with the
Series A Notes, the "Notes").
C. Pursuant to a certain Warrant Agreement, dated as of July 9, 1999 (as
amended, restated, supplemented or otherwise modified from time to time, the
"Warrant Agreement"), Pledgor has, inter alia, issued its warrants (the
"Warrants") to the Warrant Holders in order that the Warrant Holders may
purchase 12% of the capital stock of Pledgor.
D. Pursuant to a certain Stockholders Agreement, dated as of July 9, 1999
(as amended, restated, supplemented or otherwise modified from time to time, the
"Stockholders Agreement"), Pledgor has, inter alia, agreed to repurchase the
Warrants and redeem the Notes, under certain circumstances.
E. Pledgor is or will be the legal and beneficial owner of the Securities
Collateral (as hereinafter defined) to be pledged by it hereunder.
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F. Pledgor has requested that the Collateral Agent act, and the Collateral
Agent has agreed to act, as the agent of (i) the Trustee, for the benefit of
itself (in its capacity as Trustee) and the holders of the Notes (the "Note
Holders") and (ii) the Warrant Holders.
G. This Agreement is given by Pledgor in favor of the Collateral Agent, for
its benefit, and for the benefit of the Trustee (for its benefit and the benefit
of the Note Holders) and the Warrant Holders (collectively, the "Secured
Parties") to secure the payment and performance of all of the Secured
Obligations (as hereinafter defined).
Capitalized terms used herein and not defined shall have the meanings
assigned to them in the Indenture or the Stockholders Agreement.
AGREEMENT:
NOW, THEREFORE, in consideration of the foregoing premises and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
Section 1. Appointment of Collateral Agent. The Warrant Holders and the
Trustee, on its behalf and on behalf of the Note Holders, hereby designate and
appoint the Collateral Agent, and the Collateral Agent hereby accepts such
designation and appointment to serve as Collateral Agent for the Trustee and the
Warrant Holders in the manner and upon the terms and conditions set forth
herein. The Warrant Holders and the Trustee, on its behalf and on behalf of the
Note Holders, hereby irrevocably authorize the Collateral Agent to take such
action on their behalf as shall be permitted to be taken under the provisions
hereof to enforce their rights in respect of the Securities Collateral and to
initiate, prosecute and defend any and all legal proceedings against the Pledgor
relating to the Securities Collateral.
Section 2. Pledge. As collateral security for the payment and performance
when due of all the Secured Obligations, Pledgor hereby pledges, assigns,
transfers and grants to the Collateral Agent for its benefit and the benefit of
the other Secured Parties, a continuing first priority security interest in and
to all of the right, title and interest of Pledgor in, to and under the
following property, wherever located, whether now existing or hereafter arising
or acquired from time to time (collectively, the "Securities Collateral"):
(a) the issued and outstanding shares of capital stock of American
Tissue Inc. (the "Company") owned by the Pledgor described in Schedule I
hereto, all additional shares of capital stock of whatever class of the
Company from time to time acquired by Pledgor in any manner (the "Pledged
Shares") (which are and shall remain at all times until this Agreement
terminates, certificated shares);
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(b) all options, warrants, rights, agreements, or other interests
relating to the Company, including, without limitation, any right relating
to the equity in the Company (collectively, the "Additional Interests")
from time to time acquired by Pledgor in any manner and the certificates,
instruments and agreements, if any, representing the Additional Interests;
(c) without affecting the obligations of Pledgor under any provision
prohibiting such action hereunder or under the Indenture or the
Stockholders Agreement, in the event of any consolidation or merger in
which the Company is not the surviving entity, all shares of each class of
the capital stock of the successor corporation or interests or certificates
of the successor limited liability company or partnership owned by Pledgor
(unless such successor is Pledgor itself) formed by or resulting from such
consolidation or merger (collectively, the "Successor Interests"; together
with the Pledged Shares and the Additional Interests, the "Pledged
Securities");
(d) subject to the provisions of Section 7(b)(i)(B), all dividends,
cash, options, warrants, rights, instruments, distributions, returns of
capital or principal, income, interest, profits and other property,
interests (debt or equity) or proceeds, including as a result of a split,
revision, reclassification or other like change of the Pledged Securities,
from time to time received, receivable or otherwise distributed to such
Pledgor in respect of or in exchange for any or all of the Pledged
Securities (collectively, "Distributions"); and
(e) all "proceeds", as such term is defined in the Uniform Commercial
Code, as in effect from time to time in any applicable jurisdiction (the
"UCC") or under other relevant law, and in any event shall include, without
limitation, any and all (i) proceeds of any insurance (except payments made
to a Person which is not a party to this Agreement), indemnity, warranty,
guaranty or claim payable to the Collateral Agent or to Pledgor from time
to time with respect to any of the Securities Collateral, (ii) payments (in
any form whatsoever) made or due and payable to Pledgor from time to time
in connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Securities Collateral by any
Governmental Authority (or any Person acting on behalf of a Governmental
Authority), (iii) instruments representing obligations to pay amounts in
respect of the Securities Collateral, (iv) products of the Securities
Collateral and (v) other amounts from time to time paid or payable under or
in connection with any of the Securities Collateral.
Section 3. Secured Obligations. This Agreement secures, and the Securities
Collateral is collateral security for, the payment and performance in full when
due, whether at stated maturity, by acceleration or otherwise (including,
without limitation, the payment of interest and other amounts which would accrue
and become due but for the filing of a petition
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in bankruptcy or the operation of the automatic stay under Section 362(a) of the
Bankruptcy Code, 11 U.S.C. ss. 362(a)), of (i) all obligations of Pledgor now
existing or hereafter arising under or in respect of the Indenture and the Notes
(including, without limitation, the obligations of the Pledgor to pay principal,
interest and all other charges, fees, expenses, commissions, reimbursements,
premiums, indemnities and other payments related to or in respect of the
Indenture and the Notes), (ii) all obligations of Pledgor now existing or
hereafter arising under or in respect of Section 4.3(a) of the Stockholders
Agreement, and (iii) without duplication of the amounts described in clauses (i)
and (ii) all obligations of Pledgor now existing or hereafter arising under or
in respect of this Agreement or any other Collateral Document including, without
limitation, all charges, fees, expenses, commissions, reimbursements, premiums,
indemnities and other payments related to or in respect of the obligations
contained in this Agreement or in any other Collateral Document, in each case
whether in the regular course of business or otherwise (the obligations
described in clauses (i), (ii) and (iii) of this Section, collectively, the
"Secured Obligations").
Section 4. No Release. Except to the extent set forth herein, in the
Indenture or the Stockholders Agreement, nothing set forth in this Agreement
shall relieve Pledgor from the performance of any term, covenant, condition or
agreement on Pledgor's part to be performed or observed under or in respect of
any of the Securities Collateral or from any liability to any Person under or in
respect of any of the Securities Collateral or shall impose any obligation on
the Collateral Agent or any Secured Party to perform or observe any such term,
covenant, condition or agreement on Pledgor's part to be so performed or
observed or shall impose any liability on the Collateral Agent or any Secured
Party for any act or omission on the part of Pledgor relating thereto or for any
breach of any representation or warranty on the part of Pledgor contained in
this Agreement, the Indenture or the Stockholders Agreement or under or in
respect of the Securities Collateral or made in connection herewith or
therewith. The provisions of this Section 4 shall survive the termination of
this Agreement and the discharge of Pledgor's other obligations under this
Agreement, the Indenture or the Stockholders Agreement.
Section 5. Perfection; Supplements; Further Assurances; Use of Securities
Collateral.
(a) Delivery of Certificated Securities Collateral. All certificates,
agreements or instruments representing or evidencing the Securities Collateral,
to the extent not previously delivered to the Collateral Agent, shall, following
the receipt thereof by Pledgor, be delivered in accordance with Section 7(a) to
and held by or on behalf of the Collateral Agent pursuant hereto. All
certificated Securities Collateral shall be in suitable form for transfer by
delivery or shall be accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance reasonably satisfactory to the
Collateral Agent. The Collateral Agent shall have the right (but shall have no
obligation), at any time upon the
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occurrence and during the continuance of any event of default under the
Indenture or a breach of Section 4.3(a) of the Stockholders Agreement (an "Event
of Default") and without notice to Pledgor, to endorse, assign or otherwise
transfer to or to register in the name of the Collateral Agent or any of its
nominees or endorse for negotiation any or all of the Securities Collateral,
without any indication that such Securities Collateral is subject to the
security interest hereunder. In addition, the Collateral Agent shall have the
right at any time to exchange certificates representing or evidencing Pledged
Securities for certificates of smaller or larger denominations.
(b) Perfection of Uncertificated Securities Collateral. If any of the
Pledged Securities are at any time not evidenced by certificates of ownership,
then Pledgor shall, to the extent permitted by applicable law, cause such pledge
to be recorded on the equityholder register or securities transfer books of the
issuer, cause the issuer to execute and deliver to the Collateral Agent an
acknowledgment of the pledge of such Pledged Securities substantially in the
form of Exhibit 1 hereto, execute any customary pledge forms or other documents
necessary or reasonably appropriate to complete the pledge and give the
Collateral Agent the right to transfer such Pledged Securities under the terms
hereof and provide to the Collateral Agent an opinion of counsel (which may be
counsel to the Pledgor), in form and substance reasonably satisfactory to the
Collateral Agent, confirming such pledge.
(c) Financing Statements and Other Filings. The only filings, registrations
and recordings necessary to perfect the security interest granted by Pledgor to
the Collateral Agent pursuant to this Agreement in respect of the Securities
Collateral are listed in Annex A annexed hereto to the extent that a security
interest in the Securities Collateral under Article 9 of the Uniform Commercial
Code of the State of New York (as in effect on the date hereof) can be perfected
by such filing, registration or recording. All such filings, registrations and
recordings will be filed, registered and recorded contemporaneously with or as
soon as possible following the execution of the Indenture and the Stockholders
Agreement. Pledgor agrees that at any time and from time to time, it will
execute and, at the sole cost and expense of Pledgor, file and refile, or permit
the Collateral Agent to file and refile, such financing statements, continuation
statements and other documents (including, without limitation, this Agreement),
in form acceptable to the Collateral Agent, in such offices as the Collateral
Agent may deem necessary or reasonably appropriate, wherever required or
permitted by law in order to perfect and continue a valid, enforceable, first
priority security interest in the Securities Collateral as provided herein and,
as against third parties, with respect to any Securities Collateral. Without
limiting Pledgor's obligation to make such filings, following the occurrence and
during the continuance of an Event of Default, Pledgor authorizes the Collateral
Agent to file, upon notice to Pledgor, at the sole cost and expense of Pledgor,
any such financing or continuation statement or other document without the
signature of Pledgor to the fullest extent permitted by law.
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(d) Supplements; Further Assurances. Pledgor agrees to do such further acts
and things, and to execute and deliver to the Collateral Agent such additional
assignments, agreements, supplements, powers and instruments, as shall be
required or permitted by law and as shall from time to time be reasonably
requested by Collateral Agent in writing, in order to perfect, preserve and
protect the security interest in the Securities Collateral as provided herein
and the rights and interests granted to the Collateral Agent hereunder, to carry
into effect the purposes of this Agreement or better to assure and confirm unto
the Collateral Agent or permit the Collateral Agent to exercise and enforce its
respective rights, powers and remedies hereunder with respect to any Securities
Collateral.
Section 6. Representations, Warranties and Covenants. Pledgor represents,
warrants and covenants as follows:
(a) Perfection Actions Upon the completion of the deliveries, filings
and other actions contemplated in Sections 5(a) through 5(c) hereof, the
security interest granted to the Collateral Agent for the benefit of the
Secured Parties pursuant to this Agreement in and to the Securities
Collateral will constitute a perfected security interest therein, superior
and prior to the rights of all other Persons therein.
(b) No Liens. Pledgor is as of the date hereof, and, as to Securities
Collateral acquired by it from time to time after the date hereof, Pledgor
will be, the sole direct beneficial owner of all Securities Collateral
pledged by it hereunder free from any Lien or other right, title or
interest of any Person, other than the Lien and security interest created
by this Agreement and Pledgor shall defend the Securities Collateral
pledged by it hereunder against all claims and demands of all Persons at
any time claiming any interest therein adverse to the Collateral Agent or
any Secured Party. Other than this Agreement, the Stockholders Agreement
and the shareholders agreement, as amended as of July 9, 1999, among Super
American Tissue Inc., and its shareholders named therein, there is no
agreement, and Pledgor shall not enter into any agreement or take any other
action, that would result in the imposition of any other Lien, restrict the
transferability of any of the Securities Collateral or otherwise impair or
conflict with Pledgor's obligations or the rights of the Collateral Agent
hereunder.
(c) Chief Executive Office; Records. The chief executive office or
principal place of business of Pledgor is located at the address indicated
next to its name on Annex B hereto. Pledgor shall not establish a new
location for its chief executive office or principal place of business,
other than those listed on Annex B or change its name, identity or
structure until (i) it shall have given the Collateral Agent not less than
15 days' prior written notice of its intention so to do, clearly describing
such new location or name and providing such other information in
connection therewith as the Collateral Agent may reasonably request, and
(ii) with respect to such new location or
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name, Pledgor shall have taken all action reasonably satisfactory to the
Collateral Agent to maintain the perfection and priority of the security
interest of the Collateral Agent for the benefit of the Secured Parties in
the Securities Collateral intended to be granted hereby.
(d) Due Authorization and Issuance. All of the Pledged Shares have
been, and to the extent hereafter issued will be upon such issuance, duly
authorized, validly issued and fully paid and nonassessable.
(e) No Violations, etc. The pledge of the Pledged Securities pursuant
to this Agreement does not violate Regulation T, U or X of the Federal
Reserve Board.
(f) No Options, Warrants, etc. Other than as provided in the
Stockholders Agreement, there are no options, warrants, calls, rights,
commitments or agreements of any character to which Pledgor is a party or
by which it is bound obligating Pledgor to issue, deliver or sell or cause
to be issued, delivered or sold, additional Pledged Securities or
obligating Pledgor to grant, extend or enter into any such option, warrant,
call, right, commitment or agreement. Other than as provided in the
Stockholders Agreement, there are no voting trusts or other agreements or
understandings to which Pledgor is a party with respect to the transfer,
voting or exercise of any other right of the equity interests of any issuer
of the Pledged Securities.
(g) Authorization, Enforceability. Pledgor has the requisite
organizational power, authority and legal right to pledge and grant a
security interest in all the Securities Collateral pledged by it pursuant
to this Agreement, and this Agreement constitutes the legal, valid and
binding obligation of Pledgor, enforceable against Pledgor in accordance
with its terms, except as such enforceability may be limited by (i) the
effect of bankruptcy, insolvency, reorganization, fraudulent transfer,
moratorium or similar laws relating to or limiting rights and remedies of
creditors generally, by (ii) the effect of the application of general
equitable principles (whether applied in a proceeding at law or in equity),
and the discretion of the court where such proceeding is brought or (iii)
the effect of the application of due process and public policy
considerations and the availability of certain equitable remedies may be
limited by equitable principles of general applicability.
(h) No Conflicts, Consents, etc. Neither the execution and delivery of
this Agreement by Pledgor nor the consummation of the transactions herein
contemplated nor the fulfillment of the terms hereof (i) violates the
certificate of incorporation or by-laws of Pledgor or the issuer of the
Pledged Securities, (ii) violates the terms of any agreement, indenture,
mortgage, deed of trust, equipment lease, instrument or other document to
which Pledgor is a party, or by which it may be bound or to which any of
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its properties or assets may be subject, which violation or conflict would
have a material adverse effect on the value of the Securities Collateral
taken as a whole or an adverse effect on the Lien and security interests
granted hereunder (a "Material Adverse Effect"), (iii) violates any law,
order, rule or regulation applicable to Pledgor of any Governmental
Authority having jurisdiction over Pledgor or its property, which conflict
would have a Material Adverse Effect, or (iv) results in or requires the
creation or imposition of any Lien (other than the Lien created hereby)
upon or with respect to any of Securities Collateral now owned or hereafter
acquired by Pledgor. No consent of any party (including, without
limitation, equityholders or creditors of Pledgor) and no consent,
authorization, approval, license or other action by, and no notice to or
filing with, any Governmental Authority or regulatory body or other Person
is required for (x) the pledge by Pledgor of the Securities Collateral
pledged by it pursuant to this Agreement or for the execution, delivery or
performance of this Agreement by Pledgor, (y) the exercise by the
Collateral Agent of the rights provided for in this Agreement or (z) the
exercise by the Collateral Agent of the remedies in respect of the
Securities Collateral pursuant to this Agreement, other than such consents
as have been obtained and the filing of financing statements with filing
offices listed in Annex A hereto. In the event that the Collateral Agent
desires to exercise any remedies, voting or consensual rights or
attorney-in-fact powers set forth in this Agreement and determines it
necessary to obtain any approvals or consents of any approvals or consents
of any Governmental Authority or any other Person therefor, then, upon the
reasonable request of the Collateral Agent, Pledgor agrees to use its
commercially reasonable efforts to assist and aid the Collateral Agent to
obtain as soon as practicable any necessary approvals for the exercise of
any such remedies, rights and powers.
(i) Securities Collateral. All information set forth herein by
Pledgor, including the schedules and annexes attached hereto, and all
information contained in any documents, schedules and lists heretofore
delivered by Pledgor to any Secured Party in connection with this
Agreement, in each case, relating to the Securities Collateral, is accurate
and complete in all material respects.
Section 7. Concerning Securities Collateral.
(a) Pledge of Additional Securities. Pledgor shall, upon obtaining any
Pledged Securities of the Company, accept the same in trust for the benefit of
the Collateral Agent and promptly (and in any event within five Business Days)
deliver to the Collateral Agent a pledge amendment, duly executed by Pledgor, in
substantially the form of Exhibit 2 hereto (each, a "Pledge Amendment"), and the
certificates and other documents required under subsections 5(a) and 5(b) in
respect of the additional Pledged Securities which are to be pledged pursuant to
this Agreement, confirming the attachment of the Lien hereby created on and in
respect of such additional property. Pledgor hereby authorizes the Collateral
Agent to
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attach each Pledge Amendment to this Agreement and agrees that all Pledged
Securities listed on any Pledge Amendment delivered to the Collateral Agent
shall for all purposes hereunder be considered Securities Collateral.
(b) Voting Rights; Distributions; etc.
(i) So long as no Event of Default shall have occurred and be continuing:
(A) Pledgor shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Securities Collateral or any
part thereof for any purpose not inconsistent with the terms or
purposes of this Agreement, the Shareholders Agreement or the
Indenture and; provided, however, that Pledgor shall not in any event
exercise such rights in any manner which is likely to have a Material
Adverse Effect.
(B) Subject to the terms of the Indenture and the Stockholders
Agreement, Pledgor shall be entitled to receive and retain, and to
utilize free and clear of the Lien of this Agreement, any and all
Distributions, but only if and to the extent made in accordance with
the provisions of the Indenture and the Stockholders Agreement;
provided, however, that any and all such Distributions consisting of
rights or interests in the form of securities shall be delivered to
the Collateral Agent to hold as Securities Collateral as provided in
Section 7(a) and shall, if received by Pledgor, be received in trust
for the benefit of the Collateral Agent, be segregated from the other
property or funds of Pledgor and be forthwith delivered to the
Collateral Agent as Securities Collateral in the same form as so
received (with any necessary endorsement).
(C) The Collateral Agent shall be deemed without further action
or formality to have granted to Pledgor all necessary consents
relating to voting rights and shall, if necessary, upon written
request of Pledgor and at the sole cost and expense of Pledgor, from
time to time execute and deliver (or cause to be executed and
delivered) to Pledgor all such instruments as Pledgor may reasonably
request in order to permit Pledgor to exercise the voting and other
rights which it is entitled to exercise pursuant to Section 7(b)(i)(A)
hereof and to receive the Distributions which it is authorized to
receive and retain pursuant to Section 7(b)(i)(B) hereof.
(ii) Upon the occurrence and during the continuance of any Event of
Default:
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(A) All rights of Pledgor to exercise the voting and other
consensual rights it would otherwise be entitled to exercise pursuant
to Section 7(b)(i)(A) hereof upon the giving of notice by the
Collateral Agent shall cease, and all such rights shall thereupon
become vested in the Collateral Agent, which shall thereupon have the
sole right to exercise such voting and other consensual rights.
(B) All rights of Pledgor to receive Distributions which it would
otherwise be authorized to receive and retain pursuant to Section
7(b)(i)(B) hereof shall cease and all such rights shall thereupon
become vested in the Collateral Agent, which shall thereupon have the
sole right to receive and hold as Securities Collateral such
Distributions.
(iii) Pledgor shall, at its sole cost and expense, from time to time
execute and deliver to the Collateral Agent appropriate instruments as the
Collateral Agent may reasonably request in order to permit the Collateral
Agent to exercise the voting and other rights which it may be entitled to
exercise pursuant to Section 7(b)(ii)(A) hereof and to receive all
Distributions which it may be entitled to receive under Section 7(b)(ii)(B)
hereof.
(iv) All Distributions which are received by Pledgor contrary to the
provisions of Section 7(b)(ii)(B) hereof shall be received in trust for the
benefit of the Collateral Agent, shall be segregated from other funds of
Pledgor and shall immediately be paid over to the Collateral Agent as
Securities Collateral in the same form as so received (with any necessary
endorsement).
(c) No New Securities. Pledgor shall cause the Company not to issue any
stock or other securities or equity interests in addition to or in substitution
for the Pledged Securities issued by the Company, except to Pledgor.
(d) Defaults, etc. Pledgor is not in default in the payment of any portion
of any mandatory capital contribution, if any, required to be made under any
agreement to which Pledgor is a party relating to the Pledged Securities, and
Pledgor is not in violation of any other material provisions of any such
agreement to which Pledgor is a party. No Pledged Securities pledged by Pledgor
are subject to any defense, offset or counterclaim, nor have any of the
foregoing been asserted or alleged against Pledgor by any Person with respect
thereto, and as of the date hereof, there are no certificates, instruments,
documents or other writings which represent any Pledged Securities of Pledgor
(other than certificates representing the Pledged Securities delivered to the
Collateral Agent pursuant hereto).
Section 8. Transfers and Other Liens. Pledgor shall not (a) sell, convey,
assign or otherwise dispose of, or grant any option with respect to, any of the
Securities Collateral
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pledged by it hereunder except as permitted by the Indenture, the Stockholders
Agreement or this Agreement, (b) create or permit to exist any Lien upon or with
respect to any of the Securities Collateral pledged by it hereunder other than
the Lien and security interest granted to the Collateral Agent under this
Agreement or (c) permit any issuer of the Pledged Securities to merge,
consolidate or change its legal form, unless all of the outstanding equity
interests of the surviving or resulting entity are, upon such merger or
consolidation, pledged hereunder and no cash, securities or other property is
distributed in respect of the outstanding equity interests of any other
constituent entity that was merged into or consolidated with such issuer, unless
such cash, securities or other property is deposited in the Collateral Account
(as defined in the Indenture) or otherwise pledged to the Collateral Agent and
such Pledgor has otherwise complied with all applicable provisions of the
Indenture.
Section 9. Reasonable Care. The Collateral Agent shall be deemed to have
exercised reasonable care in the custody and preservation of the Securities
Collateral in its possession if such Securities Collateral is accorded treatment
substantially equivalent to that which the Collateral Agent, in its individual
capacity, accords its own property consisting of similar instruments or
interests, it being understood that neither the Collateral Agent nor any of the
Secured Parties shall have responsibility for (i) ascertaining or taking action
with respect to calls, conversions, exchanges, maturities, tenders or other
matters relating to any Securities Collateral, whether or not the Collateral
Agent or any other Secured Party has or is deemed to have knowledge of such
matters, or (ii) taking any necessary steps to preserve rights against any
Person with respect to any Securities Collateral.
Section 10. Exercise of Remedies upon Default; Obtaining the Securities
Collateral upon Event of Default.
(a) Notices. If the Trustee, on behalf of the Note Holders, has notice of
an Event of Default under the Indenture, the Trustee shall promptly give notice
in writing to the Collateral Agent and to the Warrant Holders. If any Warrant
Holder has notice of a breach of Section 4.3(a) of the Stockholders Agreement,
such Warrant Holder shall promptly give notice in writing to the Collateral
Agent and the Trustee. Absent notice given in accordance with the foregoing
provision, the Collateral Agent shall not be deemed to have knowledge of any
such Event of Default. The Collateral Agent, upon receipt of any written notice
from the Trustee or the Warrant Holders provided to it under this subsection,
shall immediately provide a copy thereof to the other parties hereto.
The Collateral Agent shall give notice to each other party hereto of any
legal action or proceeding of which it has been notified in writing naming the
Collateral Agent as party relating to this Agreement, the Securities Collateral
or the Collateral Agent's duties hereunder.
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(b) Remedies; Disposition.
(i) Upon the occurrence and during the continuance of any Event of Default,
then and in every such case, the Collateral Agent may (A) retain and apply the
Distributions to the Secured Obligations as provided in Section 11 hereof and
(B) exercise any and all rights as beneficial and legal owner of the Securities
Collateral including, without limitation, perfecting assignment of and
exercising any and all voting, consensual and other rights and powers with
respect to any Securities Collateral.
Upon the occurrence and during the continuance of any Event of Default, the
Collateral Agent may from time to time exercise in respect of the Securities
Collateral, in addition to the other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party on
default under the UCC, and the Collateral Agent may also in its sole discretion,
without notice except as specified below, sell, assign or grant a license to use
the Securities Collateral or any part thereof in one or more parcels at public
or private sale, at any exchange, broker's board or at any of the Collateral
Agent's offices or elsewhere, for cash, on credit or for future delivery, and at
such price or prices and upon such other terms as the Collateral Agent may deem
commercially reasonable. The Collateral Agent or any other Secured Party or any
of their respective Affiliates may be the purchaser, licensee, assignee or
recipient of any or all of the Securities Collateral at any such sale and shall
be entitled, for the purpose of bidding and making settlement or payment of the
purchase price for all or any portion of the Securities Collateral sold,
assigned or licensed at such sale, to use and apply any of the Secured
Obligations owed to such Person as a credit on account of the purchase price of
any Securities Collateral payable by such Person at such sale. Each purchaser,
assignee, licensee or recipient at any such sale shall acquire the property
sold, assigned or licensed absolutely free from any claim or right on the part
of Pledgor, and Pledgor hereby waives, to the fullest extent permitted by law,
all rights of redemption, stay and/or appraisal which it now has or may at any
time in the future have under any rule of law or statute now existing or
hereafter enacted. The Collateral Agent shall not be obligated to make any sale
of Securities Collateral regardless of notice of sale having been given. The
Collateral Agent may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned.
Pledgor hereby waives, to the fullest extent permitted by law, any claims
against the Collateral Agent arising by reason of the fact that the price at
which any Securities Collateral may have been sold, assigned or licensed at such
a private sale was less than the price which might have been obtained at a
public sale, even if the Collateral Agent accepts the first offer received and
does not offer such Securities Collateral to more than one offeree.
(ii) Pledgor acknowledges and agrees that, to the extent notice of sale
shall be required by law, ten days' notice to Pledgor of the time and place of
any public sale or of
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the time after which any private sale or other intended disposition is to take
place shall be commercially reasonable notification of such matters. No
notification need be given to Pledgor if it has signed, after the occurrence of
an Event of Default, a statement renouncing or modifying any right to
notification of sale or other intended disposition.
(c) Waiver of Notices and Claims.
Pledgor hereby waives, to the fullest extent permitted by applicable law,
notice or judicial hearing in connection with the Collateral Agent's taking
possession or the Collateral Agent's disposition of any of the Securities
Collateral, including, without limitation, any and all prior notice and hearing
for any prejudgment remedy or remedies and any such right which such Pledgor
would otherwise have under law, and each Pledgor hereby further waives, to the
fullest extent permitted by applicable law: (i) all damages occasioned by such
taking of possession, (ii) all other requirements as to the time, place and
terms of sale or other requirements with respect to the enforcement of the
Collateral Agent's rights hereunder, and (iii) all rights of redemption,
appraisal, valuation, stay, extension or moratorium now or hereafter in force
under any applicable law. The Collateral Agent shall not be liable for any
incorrect or improper payment made pursuant to this Section 10(c) in the absence
of gross negligence or willful misconduct. Except to the extent not permitted by
law, any sale of, or the grant of options to purchase, or any other realization
upon, any Securities Collateral shall operate to divest all right, title,
interest, claim and demand, either at law or in equity, of the applicable
Pledgor therein and thereto, and shall be a perpetual bar both at law and in
equity against such Pledgor and against any and all Persons claiming or
attempting to claim the Securities Collateral so sold, optioned or realized
upon, or any part thereof, from, through or under such Pledgor.
(d) Pledgor recognizes that, by reason of certain prohibitions contained in
the Securities Act of 1933, as amended (the "Securities Act"), and applicable
state securities laws, the Collateral Agent may be compelled, with respect to
any sale of all or any part of the Securities Collateral, to limit purchasers to
Persons who will agree, among other things, to acquire such Securities
Collateral for their own account, for investment and not with a view to the
distribution or resale thereof. Pledgor acknowledges that any such private sales
may be at prices and on terms less favorable to the Collateral Agent than those
obtainable through a public sale without such restrictions (including, without
limitation, a public offering made pursuant to a registration statement under
the Securities Act), and, notwithstanding such circumstances, agrees that any
such private sale shall be deemed to have been made in a commercially reasonable
manner and that the Collateral Agent shall have no obligation to engage in
public sales and no obligation to delay the sale of any Securities Collateral
for the period of time necessary to permit the issuer thereof to register it for
a form of public sale requiring registration under the Securities Act or under
applicable state securities laws, even if such issuer would agree to do so.
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(e) Notwithstanding the foregoing, Pledgor shall, upon the occurrence and
during the continuance of any Event of Default, at the request of the Collateral
Agent, for the benefit of the Collateral Agent, cause any registration,
qualification under or compliance with any federal or state securities law or
laws to be effected with respect to all or any part of the Securities Collateral
as soon as practicable and at the sole cost and expense of Pledgor. Pledgor will
use its best efforts to cause such registration to be effected (and be kept
effective) and will use its best efforts to cause such qualification and
compliance to be effected (and be kept effective) as may be so requested and as
would permit or facilitate the sale and distribution of such Securities
Collateral, including, without limitation, registration under the Securities Act
(or any similar statute then in effect), appropriate qualifications under
applicable blue sky or other state securities laws and appropriate compliance
with any other government requirements. Pledgor shall cause the Collateral Agent
to be kept advised in writing as to the progress of each such registration,
qualification or compliance and as to the completion thereof, shall furnish to
the Collateral Agent such number of prospectuses, offering circulars or other
documents incident thereto as the Collateral Agent from time to time may
request, and shall indemnify and shall cause the issuer of the Securities
Collateral to indemnify the Collateral Agent and all others participating in the
distribution of such Securities Collateral against all claims, losses, damages
and liabilities caused by any untrue statement (or alleged untrue statement) of
a material fact contained therein (or in any related registration statement,
notification or the like) or by any omission (or alleged omission) to state
therein (or in any related registration statement, notification or the like) a
material fact required to be stated therein or necessary to make the statements
therein not misleading. For purposes of clarification, the parties hereto agree
that this Section 10(e) shall not require Pledgor to register securities of any
subsidiary of the Company.
(f) If the Collateral Agent determines to exercise its right to sell any or
all of the Securities Collateral, upon written request, Pledgor shall from time
to time furnish to the Collateral Agent all such information as the Collateral
Agent may reasonably request in order to determine the number of securities
included in the Securities Collateral which may be sold by the Collateral Agent
as exempt transactions under the Securities Act and the rules of the Securities
and Exchange Commission thereunder, as the same are from time to time in effect.
Section 11. Application of Proceeds. The proceeds received by the
Collateral Agent in respect of any sale of, collection from or other realization
upon all or any part of the Securities Collateral pursuant to the exercise by
the Collateral Agent of its remedies as a secured creditor as provided in
Section 10 hereof shall be applied, together with any other sums then held by
the Collateral Agent pursuant to this Agreement, promptly by the Collateral
Agent as follows:
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First, to the payment of all costs and expenses, fees, commissions and
taxes of such sale, collection or other realization, including, without
limitation, compensation to the Collateral Agent and its agents and
counsel, and all expenses, liabilities and advances made or incurred by the
Collateral Agent in connection therewith, together with interest on each
such amount at the highest rate then in effect under the Indenture from and
after the date such amount is due, owing or unpaid until paid in full;
Second, without duplication of amounts applied pursuant to clause
First above, to the indefeasible payment in full in cash, pro rata, of (i)
interest, principal and other amounts constituting Secured Obligations
under or in respect of the Indenture and the Notes in accordance with the
terms of the Indenture and (ii) the amounts constituting Secured
Obligations under or in respect of Section 4.3(a) of the Stockholder's
Agreement owing to the Warrant Holders in accordance with the terms of the
Stockholders Agreement; and
Third, the balance, if any, to the Person lawfully entitled thereto
(including Pledgor or their respective successors or assigns).
In the event that any such proceeds are insufficient to pay in full the
items described in clauses First and Second of this Section 11, Pledgor shall
remain liable for any deficiency.
Section 12. Concerning Collateral Agent
(a) Nature of Duties of Collateral Agent. The Collateral Agent shall be
responsible for taking only such actions as are expressly set forth herein or in
any written instructions received from any Secured Party (subject to Sections 10
and 19 hereof) pursuant to the terms hereof (and the Collateral Agent shall be
entitled to presume that any such instructions are given in compliance with the
provisions hereof) and no implied duties or obligations shall be read into this
Agreement or any such instructions. Neither the Collateral Agent nor any of its
officers, directors, employees, agents or affiliates shall be liable for any
claims, losses, damages, penalties, actions, judgments, suits, liabilities,
obligations, costs or expenses of any kind or nature whatsoever resulting from
any action the Collateral Agent takes or omits to take under this Agreement or
in connection herewith, unless caused by its or their gross negligence, bad
faith or willful misconduct. The Collateral Agent may perform any of its duties
hereunder by or through its agents or employees.
(b) Compensation and Expenses. Pledgor agrees to pay, without duplication,
to the Collateral Agent, from time to time upon demand, reasonable compensation
for its acceptance of this Agreement and services rendered by it hereunder and
all reasonable disbursements, advances and expenses of the Collateral Agent in
addition to the compensation
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for its services (including, without limitation, the reasonable expenses, fees
and disbursements of counsel, agents and experts of the Collateral Agent upon
presentation of a statement describing their services) incurred by the
Collateral Agent or arising in connection with (i) the preparation, execution,
delivery, administration, modification, amendment or termination of this
Agreement or the enforcement of any of the provisions hereof, (ii) the custody
or preservation and protection of, or the sale of, collection from, or other
realization upon, any of the Securities Collateral pursuant to this Agreement,
(iii) the preservation, protection, defense, exercise or enforcement of any of
the rights of the Collateral Agent under this Agreement and in and to the
Securities Collateral or (iv) the failure by a Pledgor to perform or observe any
of the provisions of this Agreement.
(c) Stamp and Other Taxes. Pledgor hereby agrees to pay or to indemnify the
Collateral Agent for, and hold each of them harmless against, any present or
future claim for liability for any stamp, transfer or other similar tax and any
penalties or interest with respect thereto, which may be assessed, levied or
collected by any jurisdiction in connection with this Agreement or any
Securities Collateral.
(d) Filing Fees; Excise Taxes, etc. Pledgor hereby agrees to pay or to
reimburse the Collateral Agent for any and all amounts in respect of all search,
filing, recording and registration fees, taxes (including, without limitation,
any franchise taxes imposed upon the Collateral Agent in any jurisdiction),
excise taxes and other similar imposts which may be payable or determined to be
payable in respect of the execution, delivery, performance and enforcement of
this Agreement.
(e) Indemnification. Pledgor agrees to indemnify, pay and hold harmless the
Collateral Agent and each of the other Secured Parties and the officers,
directors, employees, agents and affiliates of the Collateral Agent and each of
the other Secured Parties (collectively, the "Indemnitees") from and against any
and all other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs (including, without limitation, settlement
costs), reasonable expenses or disbursements of any kind or nature whatsoever
(including, without limitation, the reasonable fees and disbursements of counsel
for such Indemnitees in connection with any investigative, administrative or
judicial proceeding commenced or threatened, whether or not such Indemnitee
shall be designated a party thereto) which may be imposed on, incurred by, or
asserted against that Indemnitee, in any manner relating to or arising out of
this Agreement or any other Collateral Document (including, without limitation,
any misrepresentation by Pledgor in this Agreement, the Indenture or any other
Collateral Document) (the "indemnified liabilities"); provided, however, that
Pledgor shall not have any obligation to an Indemnitee hereunder with respect to
indemnified liabilities if it has been determined by a final decision (after all
appeals and the expiration of time to appeal) of a court of competent
jurisdiction that such indemnified liability arose from the gross negligence or
willful misconduct of that Indemnitee. To the extent that the undertaking
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to indemnify, pay and hold harmless set forth in the preceding sentence may be
unenforceable because it is violative of any law or public policy, Pledgor shall
contribute the maximum portion which it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all indemnified liabilities
incurred by the Indemnitees or any of them to the extent such right of
contribution is not in violation of any law or public policy. Any amounts paid
by any Indemnitee as to which such Indemnitee has the right to reimbursement
shall constitute Secured Obligations secured by the Securities Collateral.
(f) Survival of Obligations. All obligations set forth in this Section 12
shall survive the execution, delivery and termination of this Agreement and the
payment of all Secured Obligations.
Section 13. Collateral Agent's Dealings with Pledgor. The Collateral Agent
may accept deposits from, lend money to, or generally engage in any kind of
banking, trust or other business with Pledgor or any of its Affiliates, in each
case as if it were not the Collateral Agent hereunder.
Section 14. Resignation by or Removal of the Collateral Agent.
(a) Resignation, Removal. The Collateral Agent may resign in writing from
the performance of all its functions and duties hereunder by so notifying the
Pledgor. A majority of the Warrant Holders may, at any time, remove the
Collateral Agent by prior written notice to the Collateral Agent, the Trustee
and Pledgor. Notwithstanding the giving of any notice provided for in this
Section 14(a), such resignation or removal shall take effect upon the acceptance
of appointment of a successor Collateral Agent pursuant to clauses (b) or (c)
below or as otherwise provided below.
(b) Appointment of Successor. Upon any such notice of resignation or
removal, Pledgor shall appoint a successor Collateral Agent hereunder, which
shall be an Acceptable Bank. Within one year after the successor Collateral
Agent takes office, a majority of the Warrant Holders or Trustee (acting at the
direction of a majority in principal amount of the then outstanding Notes) may
appoint a successor Collateral Agent to replace the successor Collateral Agent
appointed by Pledgor. If no successor Collateral Agent takes office within 60
days after the retiring Collateral Agent resigns or is removed, the retiring
Collateral Agent, Pledgor or the Warrant Holders of at least 10% of Warrants or
the Trustee (acting at the direction of the Note Holders of at least 10% in
principal amount of the then outstanding Notes) may petition any court of
competent jurisdiction for the appointment of a successor Collateral Agent. If
the Collateral Agent, after written request by any Warrant Holder who has been a
Warrant Holder for at least six months, fails (a) to comply with Sections
310(a)(1), (2) and (5) and Section 310(b) of the Trust Indenture Act of 1939 as
amended, and (b) to have a combined capital and surplus of at least $50,000,000
as set forth in its most recent published annual
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report of condition, such Warrant Holder may petition any court of competent
jurisdiction for the removal of the Collateral Agent and the appointment of a
successor Collateral Agent.
"Acceptable Bank" means an entity organized and doing business under the
laws of the United States of America or of any state thereof that is authorized
under such laws to exercise corporate trust powers, that is subject to
supervision or examination by federal or state authorities and that has a
combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition.
(c) Effectiveness of Resignation or Removal. A successor Collateral Agent
shall deliver a written acceptance of its appointment to the retiring Collateral
Agent, to Pledgor and to the Trustee and the Warrant Holders. Immediately
thereafter, the retiring Collateral Agent shall transfer all property held by it
as Collateral Agent to the successor Collateral Agent, and shall execute and
deliver to the successor Collateral Agent such documents as are necessary to
perfect or maintain the security interests, including any documents necessary to
assign or transfer all interests of the retiring Collateral Agent in the
Securities Collateral to the successor Collateral Agent, in the form or forms
adequate for proper filing or recording in such offices and such jurisdictions
as are necessary to put the successor Collateral Agent in the same position as
was the retiring Collateral Agent with respect to the Securities Collateral. All
expenses incurred in connection with the resignation or removal of any
Collateral Agent shall be borne by Pledgor. Thereafter, the resignation or
removal of the retiring Collateral Agent shall become effective and the
successor Collateral Agent shall have all the rights, powers and duties of the
Collateral Agent under this Agreement and the resigning or removed Collateral
Agent shall thereupon be discharged from its duties and obligations under this
Agreement. Any successor Collateral Agent shall give or cause to be given notice
of its succession to the Trustee and the Warrant Holders as of the date of such
succession.
(d) Consolidation, Merger, etc. If the Collateral Agent consolidates with,
merges or converts into, or transfers all or substantially all of its corporate
trust business to, another entity, the resulting, surviving or transferee entity
without any further act shall, if such resulting, surviving or transferee entity
is an Acceptable Bank, be the successor Collateral Agent. The transferring,
merging or converting Collateral Agent shall have all documents necessary to
perfect or maintain the security interests, including any documents necessary to
assign or transfer all interests of the transferring, merging or converting
Collateral Agent in the Securities Collateral, executed and delivered to it in
the form or forms adequate for proper filing or recording in such offices and
such jurisdictions as are necessary to put the successor Collateral Agent in the
same position as the transferring, merging or converting Collateral Agent with
respect to the Securities Collateral.
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(e) Compensation and Indemnification Continuing. Any Acceptable Bank acting
as Collateral Agent shall continue to be entitled to receive compensation and
indemnification as provided in Section 12 hereof so long as such Acceptable Bank
acts as Collateral Agent hereunder.
Section 15. No Waiver; Cumulative Remedies. (a) No failure on the part of
the Collateral Agent to exercise, no course of dealing with respect to, and no
delay on the part of the Collateral Agent in exercising, any right, power or
remedy hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right, power or remedy hereunder preclude any other
or further exercise thereof or the exercise of any other right, power or remedy;
nor shall the Collateral Agent be required to look first to, enforce or exhaust
any other security, collateral or guaranties. The remedies herein provided are
cumulative and are not exclusive of any remedies provided by law.
(b) In the event that the Collateral Agent shall have instituted any
proceeding to enforce any right, power or remedy under this Agreement by
foreclosure, sale, entry or otherwise, and such proceeding shall have been
discontinued or abandoned for any reason or shall have been determined adversely
to the Collateral Agent, then and in every such case, Pledgor, the Collateral
Agent and each Secured Party shall be restored to their respective former
positions and rights hereunder with respect to the Securities Collateral, and
all rights, remedies and powers of the Collateral Agent and the Secured Parties
shall continue as if no such proceeding had been instituted.
Section 16. The Collateral Agent May Perform; the Collateral Agent
Appointed Attorney-in-Fact. If Pledgor shall fail in any material respect to do
any act or thing that it has covenanted to do hereunder or if any warranty on
the part of Pledgor contained herein shall be breached such that the effect of
such failure or breach would have a Material Adverse Effect, the Collateral
Agent may (but shall not be obligated to) do the same or cause it to be done or
remedy any such breach, and may expend funds for such purpose. Any and all
amounts so expended by the Collateral Agent shall be paid by Pledgor promptly
upon demand therefor, with interest at the highest rate then in effect under the
Indenture during the period from and including the date on which such funds were
so expended to the date of repayment. Pledgor's obligations under this Section
16 shall survive the termination of this Agreement and the discharge of
Pledgor's other obligations under this Agreement, the Indenture and the
Stockholders Agreement. Pledgor hereby appoints the Collateral Agent its
attorney-in-fact, with full authority in the place and stead of Pledgor and in
the name of Pledgor, or otherwise, from time to time in the Collateral Agent's
discretion to take any action and to execute any instrument consistent with the
terms of this Agreement, the Indenture and the Stockholders Agreement which the
Collateral Agent may deem necessary or advisable to accomplish the purposes of
this Agreement. The foregoing grant of authority is a power of attorney coupled
with an interest and such appointment shall be irrevocable for the term of this
Agreement.
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Pledgor hereby ratifies all that such attorney shall lawfully do or cause to be
done by virtue hereof.
Section 17. Modification in Writing. No amendment, modification,
supplement, termination or waiver of or to any provision of this Agreement, nor
consent to any departure by Pledgor therefrom, shall be effective unless the
same shall be made in accordance with the terms of the Indenture and unless in
writing and signed by the Collateral Agent. Any amendment, modification or
supplement of or to any provision of this Agreement, any waiver of any provision
of this Agreement and any consent to any departure by Pledgor from the terms of
any provision of this Agreement shall be effective only in the specific instance
and for the specific purpose for which made or given. Except where notice is
specifically required by this Agreement, the Indenture or the Stockholders
Agreement, no notice to or demand on Pledgor in any case shall entitle Pledgor
to any other or further notice or demand in similar or other circumstances.
Section 18. Termination; Release. When all the Secured Obligations have
been paid in full this Agreement shall terminate. Upon termination of this
Agreement or any release of Securities Collateral in accordance with the
provisions of the Indenture or the Stockholders Agreement, the Collateral Agent
shall, upon the request and at the sole cost and expense of Pledgor, forthwith
assign, transfer and deliver to Pledgor, against receipt and without recourse to
or warranty by the Collateral Agent, such of the Securities Collateral to be
released (in the case of a release) as may be in possession of the Collateral
Agent and as shall not have been sold or otherwise applied pursuant to the terms
hereof, and, with respect to any other Securities Collateral, proper documents
and instruments (including UCC-3 termination statements) acknowledging the
termination of this Agreement or the release of such Securities Collateral, as
the case may be.
Section 19. Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) If to the Collateral Agent:
The Chase Manhattan Bank
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000 or 8162
Attention: Xxxxxxxx Xxxxx
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(ii) If to Pledgor:
c/o American Tissue Inc.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
Attention: President and Chief Executive Officer
with a copy to:
Xxxxxx & Xxxxxx P.C.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxxx, Esq.
(iii) If to the Trustee:
The Chase Manhattan Bank
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000 or 8162
Attention: Xxxxxxxx Xxxxx
(iv) If to the Warrant Holders, to the respective addresses
set forth on Schedule II, in each case,
With a copy to:
Xxxxxx Xxxxxx & Xxxxxxx
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxx Xxxxxxxx, Esq.
Upon any change in ownership of the Warrants, the new Warrant Holder must notify
the Collateral Agent and the Trustee of its address and telecopy number.
Notice may be provided in each case at such other address as shall be
designated by such party in a written notice to the other party complying as to
delivery with the terms of this Section 19; provided that notices to the
Collateral Agent shall not be effective until received by the Collateral Agent.
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Section 20. Continuing Security Interest; Assignment. This Agreement shall
create a continuing security interest in the Securities Collateral and shall (i)
be binding upon Pledgor, its respective successors and assigns and (ii) inure,
together with the rights and remedies of the Collateral Agent hereunder, to the
benefit of the Collateral Agent and the other Secured Parties and each of their
respective successors, transferees and assigns; no other Persons (including,
without limitation, any other creditor of Pledgor) shall have any interest
herein or any right or benefit with respect hereto. Without limiting the
generality of the foregoing clause (ii), any Secured Party may assign or
otherwise transfer any indebtedness held by it secured by this Agreement to any
other Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to such Secured Party, herein or otherwise,
subject however, to the provisions of the Indenture and the Stockholders
Agreement.
Section 21. GOVERNING LAW; TERMS. THIS AGREEMENT SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, EXCLUDING (TO THE GREATEST EXTENT PERMITTED BY LAW) ANY RULE OF LAW THAT
WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE
OF NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE
SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
SECURITIES COLLATERAL, ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK.
Section 22. CONSENT TO JURISDICTION AND SERVICE OF PROCESS; WAIVER OF JURY
TRIAL. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST PLEDGOR OR THE COLLATERAL AGENT
WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE SUPREME COURT OF THE STATE
OF NEW YORK SITTING IN NEW YORK COUNTY, THE COURTS OF THE UNITED STATES OF
AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK AND APPELLATE COURTS OF ANY
THEREOF, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF PLEDGOR AND
THE COLLATERAL AGENT ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES,
GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID
COURTS AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN
CONNECTION WITH THIS AGREEMENT. PLEDGOR AND THE COLLATERAL AGENT AGREE THAT
SERVICE OF PROCESS IN ANY PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF
BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL),
POSTAGE PREPAID, TO PLEDGOR AND THE COLLATERAL AGENT AT ITS ADDRESS SET FORTH
HEREIN
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OR AT SUCH OTHER ADDRESS OF WHICH THE COLLATERAL AGENT SHALL HAVE BEEN NOTIFIED
PURSUANT THERETO. IF ANY AGENT APPOINTED BY ANY PLEDGOR OR THE COLLATERAL AGENT
REFUSES TO ACCEPT SERVICE, SUCH PLEDGOR HEREBY AGREES THAT SERVICE UPON IT BY
MAIL SHALL CONSTITUTE SUFFICIENT NOTICE. NOTHING HEREIN SHALL AFFECT THE RIGHT
TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT
OF THE COLLATERAL AGENT OR PLEDGOR TO BRING PROCEEDINGS AGAINST PLEDGOR OR THE
COLLATERAL AGENT IN THE COURTS OF ANY OTHER JURISDICTION. PLEDGOR HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
Section 23. Severability of Provisions. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 24. Execution in Counterparts. This Agreement and any amendments,
waivers, consents or supplements hereto may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original, but all
such counterparts together shall constitute one and the same agreement.
Section 25. Headings. The Section headings used in this Agreement are for
convenience of reference only and shall not affect the construction of this
Agreement.
Section 26. Obligations Absolute. All obligations of Pledgor hereunder
shall be absolute and unconditional irrespective of:
(i) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of Pledgor;
(ii) any lack of validity or enforceability of the Indenture, the
Stockholders Agreement or any other agreement or instrument relating
thereto;
(iii) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Secured Obligations, or any other
amendment or waiver of or any consent to any departure from the Indenture
or any other agreement or instrument relating thereto;
-24-
(iv) any pledge, exchange, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to any
departure from any guarantee, for all or any of the Secured Obligations;
(v) any exercise, non-exercise or waiver of any right, remedy, power
or privilege under or in respect of this Agreement, the Indenture or the
Stockholders Agreement except as specifically set forth in a waiver granted
pursuant to the provisions of Section 19 hereof; or
(vi) any other circumstances which might otherwise constitute a
defense available to, or a discharge of, Pledgor.
IN WITNESS WHEREOF, Pledgor, the Collateral Agent, the Trustee and the
Warrant Holders have caused this Agreement to be duly executed and delivered by
their duly authorized officers as of the date first above written.
MIDDLE AMERICAN TISSUE INC.,
as Pledgor
/s/ Xxxxxxxxx Xxxxxxxxxx
By : ----------------------------
Name: Xxxxxxxxx Xxxxxxxxxx
Title: Chairman of the Board
By: /s/ Xxxxx Xxxxxxxxxx
----------------------------
Name: Xxxxx Xxxxxxxxxx
Title: President
THE CHASE MANHATTAN BANK,
as Collateral Agent
By:
----------------------------
Name:
Title:
By:
----------------------------
Name:
Title:
THE CHASE MANHATTAN BANK,
as Trustee
By:
----------------------------
Name:
Title:
IN WITNESS WHEREOF, Pledgor, the Collateral Agent, the Trustee and the
Warrant Holders have caused this Agreement to be duly executed and delivered by
their duly authorized officers as of the date first above written.
MIDDLE AMERICAN TISSUE INC.,
as Pledgor
By : ----------------------------
Name:
Title:
THE CHASE MANHATTAN BANK,
as Collateral Agent
/s/ Xxxxxxxx Xxxxx
By: ----------------------------
Name: Xxxxxxxx Xxxxx
Title: Vice President
/s/ Sheik Wiltshire
By: ----------------------------
Name: Sheik Wiltshire
Title: Second Vice President
THE CHASE MANHATTAN BANK,
as Trustee
/s/ Xxxxxxxx Xxxxx
By: ----------------------------
Name: Xxxxxxxx Xxxxx
Title: Vice President
Warrant Holders:
DLJMB Funding II, Inc.
By: DLJMB Funding, Inc.
By: /s/ Xxxxxx Xxxx
----------------------------
Name:
Title:
DLJ Merchant Banking Partners II, L.P.
By: DLJ Merchant Banking II, Inc.
Managing General Partner
By: /s/ Xxxxxx Xxxx
----------------------------
Name:
Title:
DLJ Merchant Banking Partners II-A, L.P.
By: DLJ Merchant Banking II, Inc.
Managing General Partner
By: /s/ Xxxxxx Xxxx
----------------------------
Name:
Title:
DLJ FIRST ESC L.P.
By: DLJ LBO PLANS MANAGEMENT
CORPORATION
General Partner
By: /s/ Xxxxxx Xxxx
----------------------------
Name:
Title:
DLJ OFFSHORE PARTNERS II, C.V.
By: DLJ MERCHANT BANKING II, INC.
Managing General Partner
By: /s/ Xxxxxx Xxxx
----------------------------
Name:
Title:
DLJ EAB PARTNERS, L.P.
By: DLJ LBO PLANS MANAGEMENT
CORPORATION
General Partner
By: /s/ Xxxxxx Xxxx
----------------------------
Name:
Title:
DLJ ESC II L.P.
By: DLJ LBO PLANS MANAGEMENT
CORPORATION
General Partner
By: /s/ Xxxxxx Xxxx
----------------------------
Name:
Title:
DLJ DIVERSIFIED PARTNERS, L.P.
By: DLJ DIVERSIFIED PARTNERS, INC.
Managing General Partner
By: /s/ Xxxxxx Xxxx
----------------------------
Name:
Title:
DLJ DIVERSIFIED PARTNERS-A, L.P.
By: DLJ DIVERSIFIED PARTNERS, INC.
Managing General Partner
By: /s/ Xxxxxx Xxxx
----------------------------
Name:
Title:
DLJ MILLENNIUM PARTNERS, L.P.
By: DLJ MERCHANT BANKING II, INC.
Managing General Partner
By: /s/ Xxxxxx Xxxx
----------------------------
Name:
Title:
DLJ MILLENNIUM PARTNERS-A, L.P.
By: DLJ MERCHANT BANKING II, INC.
Managing General Partner
By: /s/ Xxxxxx Xxxx
----------------------------
Name:
Title:
SCHEDULE I
Pledged Shares
Pledgor: Middle American Tissue Inc.
PERCENTAGE OF
ALL ISSUED
CAPITAL OR
NUMBER OTHER EQUITY
CLASS CERTIFICATE OF INTERESTS OF
ISSUER OF STOCK NO(S). SHARES ISSUER
------ -------- ----------- ------ -------------
American Tissue Inc. Common 1 200 100%
